You Spent $18 Billion to Repair Ghost Refineries, Now You Want Partners? Bravo, NNPC!

$18 Billion Wasted & A New Fuel Tariff Looms: Nigeria’s Refining Gamble Faces Reality Check

In a dramatic exhibition of missed opportunities and policy contradictions, Nigeria finds itself still burdened by the weight of failed state-refinery investments and a downstream sector seemingly at odds with its own reform agenda.

Moribund Refineries: A Multi-Billion Dollar Question Mark

Aliko Dangote, Africa’s richest industrialist, has issued a stark indictment of the nation’s state-owned refineries operated by the Nigerian National Petroleum Company Limited (NNPC). At a recent event he stated bluntly that the Port Harcourt, Warri and Kaduna refineries “may never operate properly again,” despite some US$18 billion having been expended on their rehabilitation. 

He drew an analogy that turnaround efforts are “like trying to modernise a car built 40 years ago — even if you change the engine, the body will not be able to take the shock of that new-technology engine.” 

Dangote further recalled how his own firm once acquired those three refineries in 2007, only to be handed them back following a change of government — and that the actual output of those facilities was a mere ~22 % of PMS (petrol) production at the time. 

Former President Olusegun Obasanjo has voiced similar concerns, alleging the NNPC knew from the outset it could not operate the refineries, but proceeded anyway — thereby enabling what he described as a “corruption‐carnival” rather than functional infrastructure. 

The implication is bleak: decades of investment, specialised contractors, turnaround efforts — yet the plants remain largely unproductive. Dangote argues that in effect Nigeria has poured billions into a black hole. 

The Emerging Private Refining Reality

Contrast this with Dangote’s own 650 000 barrels-per-day facility in Lagos, which began production in January 2024 and is touted as Africa’s largest single-site refinery. 

His point is that if the private sector can build and operate such a facility, the failure of public refineries becomes even harder to excuse. In short: Nigeria exports crude, spends huge forex on fuel imports, while state plants rot.

Import Dependency & Proposed Tariff Shock

While the upstream and refining picture crumbles, Nigeria still imports vast quantities of refined products. Reports state that in February 2025 alone Nigeria imported petrol and diesel with an import bill exceeding N929 billion (≈ US$620 million) — despite increased local refining capacity. 

Recently, policy papers and analysts have flagged a proposed 15 % import duty (tariff) on fuel imports as part of a drive to protect local refining and raise revenue. According to one detailed Vanguard article, the published draft suggests the levy could translate to an extra ₦150–₦175 per litre of petrol, with wide-ranging implications for both households and businesses. 

However, while circulating widely, the tariff has not yet been definitively confirmed in law—or at least, not in publicly authenticated form.

The Disconnect: Reform or Regression?

Therein lies the tension. On one side, the federal government under Bola Tinubu has emphasised reform: eliminating subsidies, encouraging local refining, and moving away from petroleum import dependence. 

On the other side:

Billions of dollars spent on unproductive state assets (the NNPC refineries).

Continuing massive fuel import bills that drain forex and impair the naira.

A proposed tariff that may raise fuel prices for ordinary Nigerians while favouring entrenched interests in the local refining space.

The tariff, if adopted, could protect local refining—but it may not promote competition or reduce consumer costs. Instead, it risks shifting importers’ costs onto consumers while potentially granting oligopolistic advantage to major refiners. As the Vanguard commentary put it: “In reality it will only enrich monopoly and punish Nigerians.” 

The Election Angle & Political Stakes

The 2027 election looms large in this context. With fuel prices, living costs, foreign exchange pressures and infrastructure failures all centre­stage—it is not a coincidence that observers believe the reform (or lack thereof) of the oil sector will deeply influence political contests. When the user comment “2027 election is a game CHANGER” is considered, it reflects a broader public sentiment: energy sector performance (or dysfunction) is no longer technocratic—it is political.

Key Takeaways for Stakeholders

For government: Without turning around state refineries or significantly strengthening private capacity (via transparent regulation and accountability), Nigeria risks continuing the importation cycle and foreign exchange drain.

For refiners: If local refining is to be viable, the economics must be robust—pricing transparency, sufficient feed-crude supply, logistical support, and fair competition matter. Dangote’s success provides a proof point, but also shows the gap.

For consumers: A tariff—if implemented—may increase pump prices. The promise of cheaper local fuel may not materialise in the short term; instead, the burden could fall on citizens while the sector reshuffles.

For the elections: Policymakers will have to justify not only the infrastructure spending, but the lived reality of fuel costs, transport inflation, forex pressures, and downstream reliability. The electorate will remember.

My View

This is more than just an energy sector story—it is a narrative about governance, accountability, and strategic national assets. The $18 billion question isn’t just “what went wrong?” but “what now works?” Nigeria is at a crossroads: either the state refineries become a legacy of failure, or the tariff regime and local refining capacity genuinely shift the balance of power in favour of energy independence.

Yet the risk is clear: if the government simply uses a 15% tariff (or whatever final variant emerges) as a shield for insiders rather than a springboard for reform, then the promises of “local refining, no more imports, stronger naira” will ring hollow.

In short: expect heated debates this year and into the election period. The reform rhetoric is strong—but delivery and transparency will determine whether Nigerians buy change, or simply keep paying more for fuel.